why did N/Rock sell a mortgage to a 70 year old

Dan_1976

I agree with a few other posts. I dont agree with the policy, it should have not been availble, but this is not a black and white case.

Advice may have suited plans at the time, but things change. How many times as a broker do you here a client say they will sell up and down size etc etc and then the look on the clients face when you say, sorry I aint doing that!

luckyfool

At some point people have to take some personal responsibility for what they choose to do. What ltv is the mortgage at currently? Could he take equity release to pay it off in full? Can he downsize?

payless

( edit crossed with LF post - so covering so points already raised)

yes obviously making something secured is an issue ( if previously unsecured) but I assume the rates of interest on mortgage were lower + as only taking interest only the monthly repayments were much lower than pre-consolidation. ( what they have done with the difference Or were the previous debts going to go into default which in its self would have an issue).
Was a mortgage already in place previously

To take things forward will NR continue to allow I/O on an extended term (or even convert to a roll-up) if no other repayment options available/ affordable.

Of course no-one here knows the full story and there may have been an element of mis-selling ( although we don't know if the adviser did cover all the points and it was agreed this was best option ??) or inprudent leanding - but on what we see we have an element of client placing themselves into the situation themselves as well.

I had a similiar case 18 years ago ( 60 yr old wanting a RTB - max discount- planned to downsize ( so effectively get home for free after a few years ) , mtg interest less than rent .. could not afford repayment on the short term though, fair pension projection- so we finally processed on i/o. ( stressing pitfalls of giving up a tenancy for a purchase )

Next year had a compliant ( via his daughter - who had become a financial adviser -
complaint was not about i/o or mortgage but that I did not arrange an endowment at the same time ! Guess she was happy to sell him one though

koexelek

luckyfool wrote: »

At some point people have to take some personal responsibility for what they choose to do.

Agreed. Although, with hindsight, it probably was not the best advice, I can't imagine Northern Rock ( or the broker if there was one) put a gun to his head and made him take it

sporedude

Isnt the whole point of a mortgage is to pay it back? Or are you just looking for excuses to get out now that your in laws are getting older?

astreix

Even after the recent house price falls, for a mortgage that was taken 9 years ago, house prices have gone up considerably since then.

If no further borrowing is secured on the property, I would expect your FIL should have a a sizeable amount of equity in the property. If that is the case, have you considered an equity release mortgage? Given your FIL is approaching 80, he should be able to get a decent LTV on an equity release mortgage. The advantage is that the mortgage does not have to be paid back during his lifetime and is repaid from his estate.

opinions4u

blowjangles wrote: »

9 years ago my in laws were "advised" to take out a ten year - interest only mortgage by a financial advisor. At the time my father in law was 70 and at the time he needed money to clear and consolidate existing debts.

How would he have cleared his debts without the mortgage?

The mortgage was accepted by n/rock and has been religiously paid to this day. As the day of reckoning looms in just over a year's time when my father in law has to stump up the mortgage loan to n/rock he is worrying himself silly as to where he is going to find the money.

Has he asked them if they would extend the interest only period? Has he enquired about remortgaging elsewhere? If his income will cover the loan needed it is an option.

He is now nearing his 80th birthday and shouldn't be having to worry about issues like this.

Perhaps he should have worried about them more before his 70th birthday. Sorry if that sounds harsh.

Something about this does not sit well with my moral compass and i suspect that 9 years ago he was miss-sold this mortgage.

And the alternative may have been debts that he couldn't afford. Whether he was mis-sold or not is irrelevant, as mortgages weren't regulated then. So nobody is liable. Except for the person who built up the debts and moved them to an interest only option.

Is there anyone out there that can offer answers to a theory of miss-selling or any advice on avenues to go down.

Look in to the options I posted above. Alternatively sell up and rent - sheltered accommodation perhaps?

Good luck.

jamesd

blowjangles, you really need to recalibrate your moral compass. You're arguing that 70 year olds are not capable of handling debt and should not be granted credit. That would do tremendous harm to the vast majority of them, and those older who are perfectly capable of using credit sensibly. Your in laws seem to have screwed up badly or perhaps just buried their heads in the sand and hoped to be dead before the mortgage ended.

Moving on to things that may be of more practical value, check the original loan documents. Given their age it's entirely possible that the repayment vehicle proposed for the mortgage was sale of the property, in the erroneous belief that they wouldn't be around at that time, so would just have a bit less money to pass on as an inheritance. One approach that could be taken in this case is proceeding with the originally declared plan and selling the property, relocating to one that might be smaller, cheaper and easier to live with given any reduced physical capacity that might be affecting them.

Another option is to remortgage with Northern Rock or another lender, again on interest only basis and (again?) with the repayment vehicle proposed being sale of the property, anticipating that it would be after death of both partners. If the term is ten years from now there's something around a 50% chance that one of them would still be alive at that point, assuming average health, so ten years is not sufficient to defer the issue until after death.

Doing that and making capital repayments could eliminate the problem. Possibly with a longer term if necessary, and possibly with a repayment mortgage instead of interest only.

If that's unpalatable to them they also have the option of a lifetime mortgage that will repay the current one and either roll up the interest, adding it to the debt, or require just interest payments. The mortgage would be repaid on sale of the property after the death of both partners, or at any earlier sale.

If you anticipate inheriting the property or a portion of it there's also the option of them selling you the appropriate portion of the property to cover the existing mortgage and using the proceeds to clear it.

It's also worth them considering whether they would prefer a smaller place with adaptations to make life easier. If so they might consider selling the property and using any surplus to buy an annuity to increase their regular income level.

There's no shortage of options to deal with this, so there's no need for your in-laws to worry greatly about it even though they have waited a long time. Just takes picking one or more options and acting on them.

SouthCoast

Northern Wreck enabled lifestyle choices.

Post on the Debt Free Wanabee Board with a statement of affairs including all debts.